On a Certain Day in February 2008, Amazon

question 27

Multiple Choice

On a certain day in February 2008, Amazon.com's forward P/E was reported to be 32.31 and its beta was 3.04. The relevant risk-free rate at the time was 3%. Assume that 5% is a reasonable
Equity premium to use. What does this data suggest Amazon's expected eternal earnings
Growth rate was?

• A)15.2%
• B)35.9%
• C)21.2%
• D)13.8%

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Definitions:

Landrum-Griffin Act

A 1959 United States law aiming to regulate labor unions' internal affairs and their officials' relationships with employers.

Department Of Labor

A cabinet-level department of the U.S. government responsible for occupational safety, wage standards, unemployment insurance benefits, re-employment services, and some economic statistics.

Voluntary Mediation

A process where conflicting parties choose to engage a neutral third party to help them reach a mutually satisfactory agreement without litigation.

Labor And Management

The collective groups of employees (labor) and employers (management) in a workplace or industry, often with contrasting interests and objectives.